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Thursday, April 07, 2011

Southbound checkpoints won't catch banks laundering drug funds

Regular readers know Texas legislators hope to raise revenue through asset forfeiture from money seized at proposed southbound checkpoints, but that assumes most drug money is being transported in cash south of the border. In fact, law enforcement pursuing drug money arguably would do better to focus on Wall Street banks than low-level couriers on the highway. The Guardian (UK) has an extensive article on a story Grits was focused on 3-4 years ago regarding money laundering for drug cartels through some of the largest banks in the nation. The Guardian article hones in on activities at Wachovia, which was later acquired by banking giant Wells Fargo, noting that "the bank was sanctioned for failing to apply the proper anti-laundering strictures to the transfer of $378.4bn – a sum equivalent to one-third of Mexico's gross national product." The consequence? "[T]he total fine was less than 2% of the bank's $12.3bn profit for 2009." Barely even a slap on the wrist.

I'd add that Wachovia wasn't the only major bank involved, by a longshot. Others implicated in the past include Israel Discount Bank of New York; Harris Bank in Chicago; and J.P. Morgan Chase. And it's not just private banks, either: Grits has described how the federal Ex-Im Bank gave loans to cartel figures; when the loans were discovered, new guidelines promulgated to stop the problem weren't made mandatory. Money laundering is one of those stories where, even among the most ardent drug warriors, the folks in power would mostly prefer that unpleasant truths never came out. It's much more politically comfortable to blame low-level couriers instead of high-level bank executives. But by doing so, law enforcement is likely ignoring the bulk of money laundering activities.

12 comments:

David RD
said...

I heard about this believe on a PBS Frontline show. I wonder what kind of sentence that the little courier would get if caught - with let's say $100,000? It's shows how much of a joke this trillion $$$ of drug war is and how corrupt our regulatory agencies, politicians, and for sure the Justice Department are. The CEO's, boards of directors, and anyone in the accounting areas of these HUGE and CROOKED banks should actually receive jail time and GIGANTIC fines...let's say equal to 1/2 the banks annual profits...if caught laundering the trillions of drug profits. But, again, shows one just how much influence and rampant corruptness within our Government...State and Federal. THESE are the true culprits behind the Cartels - the banks and their CEOs and boards. We should legalize and control drugs like we do liquor - rake in the tax revenue.

Ah, yes, another area where you and I would go to jail, and the banks get a slap on the wrist. Keep it up, guys, and eventually enough people will catch on that the system doesn't work for them. If you want to take action, withdraw all your personal business from these corrupt banks; use community or local banks instead.

8:48, you need to read the linked article. Just in case you don't know, banks take cash deposits! And just one bank failed to exercise money laundering controls over a "sum equivalent to one-third of Mexico's gross national product."

Yes, drugs are a cash business and the money has to get back to Mexico. But if you're a cartel, are you going to entrust all your cash to a footsoldier who might run off with the money or send it electronically with the help of a crooked banker? There is lots less risk going with the banker, which is why the numbers we hear regarding money laundering at banks are in the many billions while federal southbound checkpoints seized just $55 million in cash over two years.

11:06, the cartels have been kicking law enforcement's ass up and down the road on this issue for decades, they don't need my help. Arrest one, two more crop up, then you yell "We're winning, hurray!" But the drugs and money keep flowing, don't they?

And no, I don't think they're "all" using banks. I think they spread out their risk among multiple money laundering tactics. But even including all the money seized by states and locals, it still doesn't come CLOSE to the amounts described in coverage of high-level money laundering.

Read the story: The UN says cartel money actually bailed out international banks during the 2008 credit crisis, when they were among the only sources of liquidity. They're also transferring cash across the border via vehicles, but not remotely on that scale.

No one said that we were winning....and I know that banks take cash deposits, but I don't believe a car load of Mexican Nationals is going to roll up to the nearest bank and ask to open a checking account and hand over 1 million plus in cash....

I do know that each and every cash transaction that involves a sum of money in excess of 10,000.00 is automatically flagged and the person conducting the transaction is given what is called a cash transaction report.

So please do not make any further feeble attempts at being condescending.....

Afterall you are not the only person that knows a few things, maybe you are just the loudest and most obnoxious....

12:40, perhaps you missed the part of the article that mentioned some banks aren't following the anti-money laundering rules and are slapped on the wrist when they're caught laundering? But hey, why let facts get in the way of your preconceptions?

Also, on the US side there are plenty of Americans involved, so there's no need for a "carload of Mexican Nationals" to open a checking account. Again, the UN says drug money bailed banks out of the 2008 liquidity crisis, but other than just mouthing denials, you have no response to that. That's a LOT bigger sum than the (relatively) nickel and dime amounts captured in bulk cash.

Underestimating one's opponent is the worst mistake you can make, and that's what you're doing: The cartels are waaaaay more financially sophisticated than you give them credit for.

You can almost be guaranteed that MUCH MUCH more money from the cartels flow through US banks than is couriered down and across the border. An excerpt from Roger Ebert's "The One Percenters" Chicago Suntimes blog about "The upper 1 percent of Americans are now taking in nearly a quarter of the nation's income every year."

In the Blog he writes about the Wachovia money laundering scandel of a cpl years ago: "The most visible centers of these crimes against the population are Wall Street and the financial industry in general. Although there are still many honest bankers, some seem to regard banking and trading as a license to steal. Outrageous acts are committed and go unpunished. Consider this case of money laundering by Wachovia Bank, now part of Wells Fargo. This Guardian article reports: "The authorities uncovered billions of dollars in wire transfers, traveler's checks and cash shipments through Mexican exchanges into Wachovia accounts." Ebert states the fact: "The bank paid fines of less than 2% of its $12.2 billion profit in 2009. No individual was ever charged with a crime. We need not doubt that Wachovia executives received bonuses over the period of time when they were overseeing these illegal activities. Permit me to quote one more paragraph: "More shocking, and more important, the bank was sanctioned for failing to apply the proper anti-laundering strictures to the transfer of $378.4 billion -- a sum equivalent to one-third of Mexico's gross national product -- into dollar accounts from so-called casas de cambio (CDCs) in Mexico, currency exchange houses with which the bank did business." If a third of the Mexican GNP passes through your bank and you don't ask the questions required by law, you are either (1) a criminal, or (2) incompetent. I can't think of another possibility.

The entire blog article can be read at: http://blogs.suntimes.com/ebert/2011/04/the_one-percenters.html

FRONTLINE also did a show on this too. You can bet that Wachovia was just the "tip of the iceberg" when it comes to laundering cartel money...probably ALL THE BIG BANKS and even some smaller ones are doing this business with little oversight and with almost total impunity!

You can almost be guaranteed that MUCH MUCH more money from the cartels flow through US banks than is couriered down and across the border. An excerpt from Roger Ebert's "The One Percenters" Chicago Suntimes blog about "The upper 1 percent of Americans are now taking in nearly a quarter of the nation's income every year."

I'm spliting this up into several comments so it will post - see the next thread:

In the Blog he writes about the Wachovia money laundering scandel of a cpl years ago: "The most visible centers of these crimes against the population are Wall Street and the financial industry in general. Although there are still many honest bankers, some seem to regard banking and trading as a license to steal. Outrageous acts are committed and go unpunished. Consider this case of money laundering by Wachovia Bank, now part of Wells Fargo. This Guardian article reports: "The authorities uncovered billions of dollars in wire transfers, traveler's checks and cash shipments through Mexican exchanges into Wachovia accounts." Ebert states the fact: "The bank paid fines of less than 2% of its $12.2 billion profit in 2009. No individual was ever charged with a crime. We need not doubt that Wachovia executives received bonuses over the period of time when they were overseeing these illegal activities. Permit me to quote one more paragraph: "More shocking, and more important, the bank was sanctioned for failing to apply the proper anti-laundering strictures to the transfer of $378.4 billion -- a sum equivalent to one-third of Mexico's gross national product -- into dollar accounts from so-called casas de cambio (CDCs) in Mexico, currency exchange houses with which the bank did business." If a third of the Mexican GNP passes through your bank and you don't ask the questions required by law, you are either (1) a criminal, or (2) incompetent. I can't think of another possibility.

FRONTLINE also did a show on this too. You can bet that Wachovia was just the "tip of the iceberg" when it comes to laundering cartel money...probably ALL THE BIG BANKS and even some smaller ones are doing this business with little oversight and with almost total impunity! We should continue random border EXIT checks for weapons and large amount of cash, however the MAJOR bucks definitively flow through OUR and other countries banks and financial institutions.

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